Equity markets saw a continuation of their downward trend on Monday, as the benchmark BSE Sensex witnessed a sharp decline of 824.29 points or 1.08 per cent, closing at 75,366.17. The broader NSE Nifty also fell significantly, dropping 263.05 points or 1.14 per cent to end at 22,829.15, marking their lowest levels in seven months. The sell-off was widespread, with the Nifty Next 50 plunging 2.82 per cent and Nifty 500 declining 1.91 per cent.
In the broader market, Nifty Small-cap 100 saw a massive drop of 3.84 per cent, while the Nifty Mid-cap 100 fell by 2.75 per cent, both experiencing their worst session since January 13. All sectoral indices ended in the red, and the volatility index India VIX spiked 8.28 per cent to 18.13, indicating growing investor anxiety.
The market breadth was overwhelmingly negative, with 3,519 stocks declining compared to just 597 advances on the BSE. A significant number of 494 stocks hit their 52-week lows, and 710 stocks were locked in the lower circuit, highlighting the depth of market weakness.
The IT sector led the decline, influenced by developments in the artificial intelligence space. Satish Chandra Aluri of Lemonn Markets Desk attributed the losses in the IT sector to weak global cues, particularly related to tech companies after China’s AI start-up DeepSeek disrupted the AI race.
Major losers included HCL Tech, which tumbled 4.59 per cent, followed by Tech Mahindra (-4.18 per cent), Wipro (-3.78 per cent), Hindalco (-3.53 per cent), and Shriram Finance (-3.22 per cent). However, some defensive stocks showed resilience amidst the sell-off.
Foreign Institutional Investor (FII) outflows continued to exacerbate the market sell-off, with investors concerned about economic growth moderation and INR depreciation. The Indian rupee weakened against the US dollar, reflecting global trade uncertainties and unfavorable tariff changes by the US.
Technical analysts foresee more weakness in the market ahead, suggesting key levels to watch for potential support and resistance. The market faces several headwinds in the coming days, including upcoming events like the FOMC meeting, expiry week, and the Union budget.
Sectoral performance was uniformly negative, with Capital Markets and Media indices being the worst hit. Mid- and small-cap stocks continued their downward trajectory due to concerns over rich valuations.
Looking ahead, market participants will closely monitor the Federal Reserve meeting and the Union Budget for further direction. The Nifty’s technical setup indicates a continuation of weakness, with 22,500 as the next potential support level if the current downtrend persists.
